Argentine voters deliver a sharp blow to the Kirchners

President Cristina Fernandez de Kirchner's Peronist Party lost power in both houses of Congress in Sunday's legislative elections. Her husband, former President Nestor Kirchner, lost in his bid for a congressional seat.

Even more devastating, her husband, former President Nestor Kirchner, conceded defeat in his bid for a congressional seat, a move that was intended to buoy support for the first couple but instead backfired.

The new Congress does not take office until December, giving President Fernandez time to push through her policies, but the results of the election might force her into a more conciliatory position. It also changes the balance of power for Mr. Kirchner, who has dominated the political scene in Argentina for the past six years and had been expected to run for president again in 2011.

Kirchner, who headed a ticket of candidates in the crucial province of Buenos Aires, where more than 30 percent of eligible voters live, acknowledged he lost early Monday with 32.2 percent of the vote, behind Francisco de Narvaez, who garnered 34.5 percent.

Mr. De Narvaez is also a Peronist but part of a growing number of dissidents. Kirchner's loss opens space for new leadership within the party after Kirchner, who is widely seen as a powerful force in his wife's government, has dominated leadership for years.

"The bad politics of old has been defeated," De Narvaez said at his campaign headquarters.

Ready for change, but what kind?

The shift of power is welcomed by many – even though De Narvaez is a relative newcomer to the political scene. "I am not sure what will change, but I prefer new people and new faces," says Rodrigo Masardo, a restaurant owner in Buenos Aires. "The nation is ready for a change."

Kirchner had warned voters that a vote against him would be devastating for the economy and the poor, as it would stand in the way of their socialist policies. Fernandez has nationalized the pension system and a major airline and attempted to raise taxes for agricultural exports.

A more conciliatory approach expected

Fernandez will face a more divided Congress, which could be an obstacle to some of her more controversial moves. She has been able to push through many pieces of legislation with a majority counted between Peronists in their allies in the legislature. According to partial results, they have lost that majority, and now they might have to seek consensus.

"It will not be gridlock," says Federico Thomsen, an economic and political analyst in Buenos Aires, "but they will face a more difficult Congress. There will have to be more negotiating."

Kirchner once enjoyed what seemed infallible support among the public, after shepherding the country out of its devastating financial crisis of 2001-02. But his wife's approval rating has plummeted, with only a quarter of the population supporting her presidency. Many see the couple as increasingly authoritarian. A battle with farmers last year over export taxes cost her support in rural areas. She also faces a cooling economy.

Some hope that Fernandez changes course. Mr. Roett says that she might start to address some of the larger problems, such as widely discredited inflation numbers. "If they lose, there [could be] a reorganization of the cabinet, bringing together more pragmatic people and also a rethinking of economic policies."

One option, however, is that they simply rely on forging their way through decree, says Pablo Ava, a political analyst and vice president of Fundacion FINES, a social and economic research organization. "They could try to make many policy decisions without consensus," he says. It depends on how much they define their loss.

In acknowledging defeat Kirchner said: "This was a very close election. We lost by a little bit."